Change Management Planning for change

Internal causes New growth objectives set by management New boss is appointed Decision to open up new markets Decision to increase shareholders’ dividend may make it difficult to find capital to invest in the business

External causes Rising consumer demand Economic boom benefits luxury product Closure/fire/strike hits competitor New laws affect your product/service

If rapid growth forecast, firms can Compare sales estimate with available capacity Budget for any necessary increases in capacity & staffing Produce cash flow forecast to anticipate any short term financing shortfall Discuss how to raise any extra capital needed

Change in management structure Internal effect – team spirit hard to achieve Potential for inefficiency & mistakes, leading to a loss of business Difficult to build strong relationships with external customers & suppliers Strong leadership essential

Problems of transition in size Private to public Retrenchment – cutting back Rationalisation – significant changes to the organisational structure and/or capacity level

Types of retrenchment Freeze on recruitment Offer voluntary redundancy Delayering Closure of a division or factory Targeted cutbacks & redundancies across the business

Planning for change If you can foresee significant change, a strategic plan is needed Manage change process & ensure that business has the personnel & financial resources to cope How do we turn this change to our own advantage?

Strategic planning Necessary because firms operate in a changing environment Difference between profit objective & forecast performance of business is known as the strategic gap Once identified, devise a series of strategies to close it

Contingency Planning A Plan B in case Plan A goes wrong Fallback position in case judgements prove wrong ‘What if?’ questions asked Allows firms to consider what action it will take if particular opportunities or threats emerge as a strategy is implemented

Change Management Implementing & managing change

Market Growth Competitive pressures Changes in strategy Government legislation Technological changes Adoption of new practices Customer pressures Causes of change

Barriers to change Lack of effective leadership & project management Lack of effective training Poor communication

Resistance to change Concern about loss of control or status Feel vulnerable to threat of redundancy Resent break-up of social groups within workplace Change goes against prevailing culture

Types of resistance Active –Industrial action Passive –Failing to attend meetings Blocking successful change

Overcoming resistance Start with objectives that are clear to all & accepted as necessary or desirable by the majority Adequate resources to enable change to be effected efficiently –Financial, human, operational & technological back-up Training

Implementing change successfully Communication Project champion Involving staff rather than imposing change Ensuring appropriate leadership Creating a culture for change – a ‘learning organisation’

Managing change Control – taking steps to ensure that the final outcome of change process is as close as possible to objectives identified at the planning stage Review – what next?

Radical v. continuous change In most situations, businesses are more likely to prefer a kaizen approach Business process re-engineering = total rethink of current operations. Organisation is redesigned from scratch

Issues for analysis Benefits & problems of introducing change Is ‘do nothing’ an acceptable alternative? Change seen as an operational or technological issue may prove unsuccessful – importance of staff Resistance to change

Key issues Planning change effectively Managing change requires effective leadership Coping with change requires a suitable culture